On March 27, 2020, Louisiana’s Insurance Commissioner, Jim Donelon, issued Emergency Rule 39 in response to the COVID-19 pandemic. Emergency Rule 39 provides all commercial insureds in Louisiana the right to demand a “mid-term self-audit” to determine if their policy premiums should be reduced, as long as the commercial insurance policies are “rated using an auditable exposure basis, including but not limited to, payroll, sales, enrollment, attendance, occupancy rates, square footage or any other basis.” The rule is intended to assist Louisiana’s businesses that have lower risk exposure due to the record number of layoffs and business closures amid the ongoing COVID-19 pandemic.
Many commercial insurance policies (including, but not limited to, general liability and property policies) are rated based on payroll, sales, enrollment, attendance, occupancy rates, and/or square footage; therefore, many Louisiana business should be able to take advantage of the rule. However, to take advantage of the rule, a company must demand a “mid-term self-audit” from their insurer before the termination of Emergency Rule 39, which is currently set for May 12, 2020. Once demanded, the insured will have until end of its policy period to complete the self-audit.
Upon the insured’s completion and submission of the self-audit to its insurer, the insurer must adjust the premium and refund any overpayment of premium to the insured within 10 days, if the self-audit establishes that the premium charged at the initiation of the policy is now in excess of what the premium would be based on the current rating variables.
It is currently unclear whether Emergency Rule 39 will be extended following Governor Edwards’ most recent proclamation extending non-essential business closures through May 15, 2020, therefore, business owners must act fast.
The full text of Emergency Rule 39 can be found here.